Mexico's central bank tests Bitcoin, hoping to achieve further regulation

The head of Mexico’s central bank said they have conducted “experiments” with bitcoin in an effort to prepare for regulation.

Banks 'testing' Bitcoin

According to Mexican news platform Sobre Bitcoin, the country's central bank president Agustín Carstens confirmed that they bought a "small amount" of cryptocurrencies for research purposes in order to understand how they work.

He said:

We studied Bitcoin and did not use it for central bank operations, but instead organized small-scale money experiments.

With bitcoin’s popularity and adoption having increased since last November’s US election, it’s no surprise that the digital currency has become a target of regulators in recent months.

The Mexican bitcoin economy is booming, with exchanges like Localbitcoins setting new records, thanks to the devaluation of the Mexican peso and concerns about remittances to the United States (U.S. President Donald Trump has talked about building a wall along the Mexican border).

Steady and steady

Given its future development trends, Carstens highly recognizes Bitcoin’s ability to achieve “inclusive finance”.

It’s clear that the concept [of Bitcoin]… is to prioritize technological financial innovation to achieve the goals of lower transaction costs and greater inclusion.

He added that it is most important to have a deep understanding of the technical issues of cryptocurrencies.

… We have to be 100% sure that we understand all aspects of this transformative technology. We have to be steady and cautious about this issue.

Ever since the banking conference in March mentioned the management rules for digital assets such as Bitcoin, there have been rumors that Mexico's official regulatory measures on Bitcoin are expected to be implemented.

The worrying side of cryptocurrencies

Like other countries, the Central Bank of Mexico has also issued warnings to some inexperienced consumers, reminding them to pay attention to the financial security issues of digital currencies.

The worry is that there are technical issues, attacks and thefts that happen all the time (in this area), which makes us very nervous. We have to ensure the integrity of the technology and make sure we are fully armed to minimize the loss to the public.

While it’s unclear what the “dangers” Carstens was referring to, consumer awareness of the technology still needs to improve.

The technical issues Carstens is referring to are likely bitcoin’s long-standing scaling debate and recent slow transaction processing times, coupled with rising fees.